EPISODE 153

Make your 2024 fertilizer plans

February 13, 2024
Zach Sturm, a fertilizer trading expert with CHS, provides a crop nutrient supply and demand outlook ahead of spring planting and why growers should take action now to secure their fertilizer needs now.

Geopolitical events and shipping challenges could restrict fertilizer supplies and availability this growing season. Zach Sturm, a fertilizer trading expert with CHS, recommends that farmers start planning now to lock in needed nutrients.

“We’re about 30 to 90 days out from planting, so now is a good time for growers to get with their local account managers and work on a plan to secure the nutrients they need for their operation,” Sturm says.

Nitrogen (N), phosphorus (P) and potassium (K) are expected to be in high demand this spring, he continues. He adds growers should consider locking in nutrient supplies now as prices tend to escalate closer to planting.

“If you look at price activity in the spring, basis will typically increase $20 to $40 per ton,” explains Sturm, referring to N, P and K. “It all depends on in-season demand in your area. There are often increased transportation costs due to a shortage of trucks and a potential for shed space to run out. We could see prices rise [during planting season].”

Geopolitical events increase volatility

Key fertilizer markets continue to experience volatility due to wars involving exporting countries and regions, says Sturm. Even though fertilizer manufacturing expansion projects in Texas and North Dakota have increased domestic production, he points out the U.S. still imports about 40% of its urea needs.

“There’s extra price risk for farmers given the conflicts happening in Russia and Ukraine and in the Middle East, which are key urea supply points for the U.S.”

Logistical challenges

Spring fertilizer supplies could also be impacted by ongoing shipping challenges.

“There are two main logistical challenges we’re facing when it comes to shipping fertilizer,” Sturm explains. “The first is that vessels are avoiding the Suez Canal by going around the Cape of Good Hope. Second, there’s been low water on the Mississippi and other river segments, like the Arkansas River, making it harder to travel on these channels.”

Both events have a big impact on the ability to get fertilizer to farmers when they need it, he explains. The Suez Canal is normally a major shipping lane for products coming out of the Middle East to the U.S. However, with attacks on ships in the region in response to the war in Gaza, navigating the canal poses too much risk, forcing some ships to be rerouted around the Cape of Good Hope. The longer route adds 15 to 20 days of transit time and increases shipping costs.

Sturm urges farmers to monitor ocean transportation issues and watch U.S. river levels.

“Low water can close river segments, which can delay product getting up the river or having to find alternative routes via rail or truck,” he says.

Logistical challenges and the fertilizer market conditions make it even more important for farmers to plan now for the crop nutrients they’ll need for a successful 2024 season, Sturm concludes.

Fertilizer in a red container ship